If San Diego’s hotels are looking to Carlsbad as an example of how to generate a private stream of tourism marketing funds, they may want to look elsewhere.
A tourism business improvement district, which allows 34 hotels with 3,500 rooms to assess themselves $1 per night on rented rooms, took effect in January.
In March, the revenue began rolling in, and it’s on target to raise $750,000 for the year.
But it will fall shy of accomplishing its main objective , beefing up advertising and marketing , said Patrick Fern, president of Certified Folder Display Services Inc. and chairman of the Carlsbad Convention & Visitors Bureau.
The problem is that the city discontinued funding operations for the visitors center in February, which costs about $270,000 annually to operate, said Fern.
That’s Not How We See It
Jim Elliott, Carlsbad’s administrative services director, said, “We believed it was clear that the Carlsbad tourism business improvement district would take over operation of all tourism activities, starting with the date it was formed, or became effective, on Jan. 1.”
Carlsbad’s transient occupancy tax, also known as TOT, which is 10 percent of nightly hotel room rentals, is expected to raise $11.7 million for the 2006-2007 fiscal year. In the prior fiscal year, the city allocated $508,000 to tourism promotion, of which $100,000 went to the San Diego North Convention & Visitors Bureau, based in Escondido, and the rest to the Carlsbad Convention & Visitors Bureau.
Bureau Executive Director Kurt Burkhart said that the district’s seven-member board is holding 20 percent of the money in reserve, in case the numbers get soft in the off-season.
The district’s board is made up of executives of various hotels, including the Four Seasons Resort Aviara, La Costa Resort and Spa and Carlsbad-based Grand Pacific Resorts.
“We can pay the bills,” he said. “But we can’t do anything extra, like add staff or do the branding initiatives we’d planned for a pre-summer campaign.”
Funding for the Carlsbad Convention & Visitors Bureau was $409,100 in fiscal 2003-2004 and was flat the following fiscal year before dropping to $408,000 the next.
Fern said he plans to ask the district board to go before the Carlsbad City Council and seek reinstatement of funding for the visitors center.
“The board is being prudent in building a reserve fund,” Fern added. “The real stick in the wheel is the city.”
Bob Rauch, a hotel owner and chairman of the San Diego County Hotel-Motel Association, which backs a proposed tourism business district for San Diego, said the lesson to be learned from Carlsbad is to minimize politics.
One of the most important issues is having “a living document that clearly communicates how a business improvement district should work,” Rauch said.
“It needs to be clear on the one hand, but flexible enough to grow as times change, and it always has to be fair and that’s where politics gets involved,” he added.
Hoping to join some 13 other California communities and cities, including Sacramento, that have adopted tourism districts, those who back one for San Diego say it could raise about $26 million annually from a 2 percent surcharge on nightly room rentals.
Cash-strapped City Hall slashed funding to the San Diego Convention & Visitors Bureau by 37 percent to $8.8 million over three successive fiscal years, but left it intact this year. The remainder of the bureau’s $12.3 million operating budget comes from private revenue sources, mainly membership dues. Unlike a TOT increase, which must go before the city’s voters , two such ballot measures were recently shot down , a tourism business improvement district needs only a 50 percent plus one vote of the hotels affected to pass. It also needs the approval of City Hall.
Rauch said he’s confident that the proposal has the required hotel votes, yet it may be awhile before City Hall gets around to considering the matter.
“Frankly, the city attorney (Michael Aguirre) and the council have so many pressing issues now, they haven’t given it their full attention. But I believe it will soon go ahead without opposition,” Rauch added.
No Politics Here
Meanwhile, San DieGO Downtown, a destination marketing campaign involving an array of local businesses and organizations that pooled funds some 14 months ago to expand on the efforts of the Gaslamp Quarter Association, is chugging right along.
Funded entirely through cash and in-kind, or pro bono, contributions, the program has numerous “stakeholders,” including the San Diego Business Journal, D & #233;cor & Style magazine, SignOnSanDiego.com, American Express, the AT & T; Yellow Pages, the Manchester Grand Hyatt hotel, and locally based Cloud 9 Shuttle, Next Level Sailing and Old Town Trolley, according to Jack Berkman, who heads a local public relations agency.
“We wanted to raise our profile on a national scale,” said Dan Flores, marketing manager for the Gaslamp Quarter Association. On its own, the association raises roughly $200,000 annually from fee assessments and promotional events, including a Mardi Gras bash in February. San DieGO has raised more than $800,000 in cash and cash equivalents, he added.
The publicity garnered, according to the Berkman agency, includes 100 articles in a variety of media outlets such as the San Francisco Chronicle, Phoenix Home & Garden Magazine, Colorado Avid Golfer and Maxim magazine.
The Los Angeles Fox affiliate devoted TV coverage to last year’s Mardi Gras, and ABC’s Las Vegas station conducted a five-day Mardi Gras giveaway during its evening news broadcasts. ABC in Phoenix has also devoted airtime to downtown, Balboa Park and Hornblower Cruises.
“It is my opinion that this is only just beginning,” said Berkman.